+1.86(+3.57%)

-13.10(-1.01%)

-0.25(-1.62%)

-0.0001(-0.0114%)

Apple ends patent war on Android, deal suggests

Apple has decided to end a bitter legal war against Google and Android phone makers, and to turn away from patent tactics that have cost the smartphone industry billions of dollars, according to reports and new court filings.

The news comes in part via a landmark court order in which a federal judge agrees to stay a series of lawsuits between Google and a patent consortium known as Rockstar, that is primarily owned by Apple.

A final settlement, slated for December 29, would come more than a year after Google’s rivals used Rockstar to launch patent lawsuits against at least seven companies – including HTC, Huawei and Samsung — that make Android-based devices.

The Rockstar lawsuits threatened to further inflame a global patent battle over smartphones, and led Google to file a lawsuit of its own last Christmas in an attempt to shield phone makers.

Court filings related to the proposed settlement do not disclose any dollar figures, and Apple or Google did not reply to a request for comment. But other reports suggest that Apple is not only concluding its patent battle with Google, but also shifting its policies on patent litigation in general.

According to IAM magazine, which covers intellectual property issues, Apple appears to be intent on winding down Rockstar altogether — a dramatic turnabout from 2011, when Apple banded together with four other firms (Microsoft, Blackberry, Ericsson and Sony) to pay $4.5 billion for old Nortel patents and to create Rockstar as a patent troll to attack Google.

While Rockstar is a creature of several owners, it is Apple that is basically running the show since it is the majority share owner (it put $2.6 billion into the bid).

As IAM explains, Apple and the other Rockstar owners have apparently decided to defang Rockstar once and for all, instead of selling it to people who would operate it as a patent troll (also known as an NPE):

Now, it seems possible that the resolution referred to could be either Rockstar’s disappearance or a cents on the dollar sale to a third party that will not seek to assert the portfolio – with some people mentioning RPX as a possible player in that scenario.

With a number of the consortium unsure of their continued involvement, the IAM blog also understands that Rockstar’s management has attempted a well-funded buyout. However, this was rejected by some of the shareholders who were keen not to be seen to be profiting from an NPE. [emphasis mine]

The IAM report also connects the Google settlement to a $188 million deal publicized earlier this week that will end patent litigation between Rockstar and Cisco. While that deal initially appeared to be a defeat for Cisco, it now appears that the payout was part of a larger strategic gambit that, in the word of the Cisco CEO, “is constructive for the whole industry.”

Indeed, other court filings show patent settlements with Time Warner Cable and other communications giants — which Rockstar had sued alongside Cisco over router and networking patents.

As for Apple’s shift in patent policy, it may stem from a host of factors, including the receding influence of late CEO Steve Jobs, who had touched off the initial patent assault on Android by vowing “thermonuclear war” against Google. Under CEO Tim Cook, Apple has become more pragmatic, signing a limited truce with Google this spring and also becoming more vocal about the problems of patent trolls in general.

Overall, this flurry of settlements is likely to prove good news not just for the companies but also for consumers who will no longer have to pick up the indirect costs of the patent lawsuits when they purchases devices.

More broadly, a broad-based patent peace between tech rivals (if this is indeed what this is) could also provide a boost for an expected patent reform bill in 2015.